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[EXECUTION COPY]
CREDIT AGREEMENT AMENDMENT NO. 2
THIS CREDIT AGREEMENT AMENDMENT NO. 2, dated as of March 31, 1998
(this "Amendment"), is made by and among Evenflo & Spalding Holdings
Corporation (formerly known as E&S Holdings Corporation), a company organized
under the laws of Delaware (the "Borrower"), the Lenders (as defined below) and
Bank of America National Trust & Savings Association ("Bank of America"), as
the administrative agent (the "Administrative Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the various financial institutions parties
thereto from time to time (collectively, the "Lenders"), Bank of America, as
swing line lender, as fronting lender and as administrative agent for the
Lenders, Xxxxxxx Xxxxx Capital Corporation, as documentation agent for the
Lenders, and NationsBank N.A. South, as syndication agent for the Lenders, have
heretofore entered into that certain Credit Agreement, dated as of September
30, 1996 (as amended by the First Amendment to Credit Agreement, dated as of
December 11, 1996, the "Existing Credit Agreement"); and
WHEREAS, the Borrower has requested, and the Lenders and the
Administrative Agent are willing, subject to the terms and conditions set forth
below, to amend the Existing Credit Agreement as provided below (the Existing
Credit Agreement, as amended pursuant to the terms of this Amendment, being
referred to as the "Amended Credit Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower, the Lenders and the Administrative
Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or
not underscored) when used in this Amendment shall have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Administrative Agent" is defined in the preamble.
"Amended Credit Agreement" is defined in the second recital.
"Amendment" is defined in the preamble.
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"Amendment Effective Date Certificate" means the amendment effective
date certificate executed and delivered by the Borrower pursuant to Subpart
3.8, substantially in the form of Annex I hereto.
"Borrower" is defined in the preamble.
"Existing Credit Agreement" is defined in the first recital.
"Lenders" is defined in the first recital.
"Second Amendment Effective Date" is defined in Subpart 3.1.
"Security Agreement" means the Security Agreement executed and
delivered by the Borrower and each Domestic Subsidiary pursuant to Subpart 3.6,
substantially in the form of Exhibit A hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.
SUBPART 1.2. Other Definitions. Terms for which meanings are
provided in the Amended Credit Agreement are, unless otherwise defined herein
or the context otherwise requires, used in this Amendment with such meanings.
ARTICLE II
AMENDMENTS
Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, certain provisions of the Existing Credit Agreement are hereby
amended in accordance with this Article II; except expressly as so amended by
this Amendment, the Existing Credit Agreement shall continue in full force and
effect in accordance with its terms.
SUBPART 2.1. Amendments to Article I of the Existing Credit
Agreement. Article I of the Existing Credit Agreement ("Definitions") is
amended in accordance with Subparts 2.1.1 and 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement ("Certain
Defined Terms") is amended by inserting in such Section the following
definitions in the appropriate alphabetical order:
"Bank Book" means the Bank Book, dated March 23, 1998 and
delivered by the Borrower to the Lenders on such date.
"Casualty Event" means the damage, destruction or
condemnation, as the case may be, of any property of the Borrower or
any of its Subsidiaries.
"Casualty Proceeds" means, with respect to any Casualty Event,
the amount of any insurance proceeds or condemnation awards received
by the Borrower or any of its Subsidiaries in connection therewith.
"Liquidity Facility" means the Liquidity Facility, dated as of
March 30, 1998, among Spalding & Evenflo Companies, Inc., as the
borrower, the lenders parties thereto, Bank of
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America National Trust & Savings Association, as the administrative
agent, Xxxxxxx Xxxxx Capital Corporation, as the documentation agent
and NationsBank N.A. South as the syndication agent, as such Liquidity
Facility may be amended, modified, amended and restated or extended in
accordance with its terms.
"Mortgage" means, collectively, each mortgage or deed of trust
or leasehold mortgage executed and delivered by the Borrower or any
other Obligor in favor of the Administrative Agent for the benefit of
the Lenders pursuant to the requirements of this Agreement, in form
and substance reasonably satisfactory to the Administrative Agent, in
each case as amended, supplemented, amended and restated or otherwise
modified from time to time.
"Refinancing" has the meaning set forth in Section 8.4(m).
"Second Amendment" means the Credit Agreement Amendment No. 2,
dated as of March 31, 1998, among the Borrower, the Lenders parties
thereto and the Administrative Agent.
"Security Agreement" means the Security Agreement executed and
delivered pursuant to this Agreement, substantially in the form of
Exhibit A to the Second Amendment, as amended, supplemented, amended
and restated or otherwise modified from time to time.
SUBPART 2.1.2. The following definitions in Section 1.1 of the
Existing Credit Agreement ("Certain Defined Terms") are amended as follows:
(a) "Agreement": the definition of "Agreement" is hereby
amended and restated as follows:
"'Agreement" means this Credit Agreement, as amended
(including as previously amended), supplemented,
amended and restated or otherwise modified from time
to time."
(b) "Applicable Margin": the definition of "Applicable
Margin" is hereby amended and restated as follows:
"'Applicable Margin' means, with respect to the
Revolving Loans, the Tranche A Term Loans or the
Commitment Fee, as of any date, the rate per annum
determined pursuant to the following pricing grid
(expressed in basis points), subject to the
provisions of this definition set forth below:
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PRICING GRID
RATIO OF CONSOLIDATED
TOTAL DEBT TO
CONSOLIDATED EBITDA EURODOLLAR RATE MARGIN BASE RATE MARGIN COMMITMENT FEE
X > 6.0 250.0 150.0 50.0
X < 6.0, but > 5.5 225.0 125.0 42.5
-
X < 5.5, but > 5.0 200.0 100.0 37.5
-
X < 5.0, but > 4.5 162.5 62.5 37.5
-
X < 4.5, but > 4.0 137.5 37.5 35.0
-
X < 4.0, but > 3.5 112.5 12.5 30.0
-
X < 3.5, but > 3.0 87.5 0.0 25.0
-
X < 3.0 62.5 0.0 20.0
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The Applicable Margin for Tranche B Term Loans shall
be: (i) for so long as the ratio of Consolidated Total Debt to
Consolidated EBITDA is greater than 6.0:1.0: 3.00% for
Eurodollar Loans and 2.00% for Base Rate Loans, and (ii) for
so long as the ratio of Consolidated Total Debt to
Consolidated EBITDA is less than or equal to 6.0:1.0: 2.75%
for Eurodollar Loans and 1.75% for Base Rate Loans.
The Applicable Margin for Tranche C Term Loans shall
be: (i) for so long as the ratio of Consolidated Total Debt to
Consolidated EBITDA is greater than 6.0:1.0: 3.50% for
Eurodollar Loans and 2.50% for Base Rate Loans, and (ii) for
so long as the ratio of Consolidated Total Debt to
Consolidated EBITDA is less than or equal to 6.0:1.0: 3.25%
for Eurodollar Loans and 2.25% for Base Rate Loans.
The Applicable Margin for Tranche D Term Loans shall
be: (i) for so long as the ratio of Consolidated Total Debt to
Consolidated EBITDA is greater than 6.0:1.0: 4.00% for
Eurodollar Loans and 3.00% for Base Rate Loans, and (ii) for
so long as the ratio of Consolidated Total Debt to
Consolidated EBITDA is less than or equal to 6.0:1.0: 3.75%
for Eurodollar Loans and 2.75% for Base Rate Loans.
The Applicable Margin for Tranche A Term Loans,
Revolving Loans and the Commitment Fee, shall be determined
pursuant to the Pricing Grid above at such time. As set forth
in the Pricing Grid, "X" refers to the ratio of Consolidated
Total Debt to Consolidated EBITDA. For the purposes of
determining the Applicable Margin with respect to any Loan,
the ratio of Consolidated Total Debt to Consolidated EBITDA
shall be determined (x) from and after the effective date
hereof to the date of the Compliance Certificate referred to
in clause (y), based on the highest such level set forth above
with respect to each Loan, and (y) on and after the date of
delivery of the Compliance Certificate delivered pursuant to
clause (b) of Section 7.2, based upon such certificate, and
shall remain in effect until such time as the next Compliance
Certificate shall be delivered (and, at such time, the
Applicable Margin shall change based on such next Compliance
Certificate); provided, however, that, if (i) any such
Compliance Certificate is not delivered to the Administrative
Agent on or prior to the date required
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pursuant to clause (b) of Section 7.2 and (ii) such Compliance
Certificate indicates a ratio of Consolidated Total Debt to
Consolidated EBITDA that would result in an Applicable Margin
which is greater than the Applicable Margin then in effect,
then (A) such greater Applicable Margin shall be deemed to be
in effect for all purposes of this Agreement from the date such
Compliance Certificate was required to be delivered to the
Administrative Agent pursuant to clause (b) of Section 7.2 and
(B) in furtherance of the other terms of this proviso, if the
Borrower shall have made any payment in respect of interest or
fees during the period from the date such Compliance
Certificate was required to be delivered to the actual date of
delivery of such Compliance Certificate, then the Borrower
shall pay in the form of a supplemental payment of interest
and/or fees, an amount which equals the difference between the
amount of interest and/or fees that would otherwise have been
paid determined as if such Compliance Certificate was delivered
on the date such Compliance Certificate was required to be
delivered and the amount of such interest and/or fees so paid,
which supplemental payment of interest and/or fees shall be due
and payable on the actual date of delivery of such Compliance
Certificate."
(c) "Capital Expenditures": clause (c) of the proviso to the
definition of "Capital Expenditures" is hereby amended and restated as
follows"
" (c) the purchase or construction of property, plant or
equipment with Casualty Proceeds within one year of the
receipt of such proceeds; and";
(d) "Consolidated EBITDA": subclause (viii) of clause (b) is
hereby amended and restated as follows:
"(viii) the amount of any restructuring charge or reserve;
provided, that for any computation of such amount with respect
to a period ending on or after March 31, 1998, the maximum
aggregate amount of any such restructuring charge or reserve
shall be limited to the aggregate amounts projected as of
March 23, 1998 in the Bank Book (and, without duplication,
such charges taken or disclosed in the Bank Book in respect of
periods ending prior to March 31, 1998)";
(e) "Interest Period": the definition of "Interest Period" is
amended by deleting the words "three or six months thereafter (or
ending 9 or 12 months thereafter if available to all Lenders making
such Loans as determined by such Lenders in good faith based on
prevailing market conditions)" beginning in the third line thereof and
by inserting the words "or three months thereafter" after the words
"on the date one, two," appearing in the third line thereof;
(f) "Loan Documents": the definition of "Loan Documents" is
hereby amended and restated as follows:
"'Loan Documents" means this Agreement, any
Notes, the Guaranty, the Pledge Agreement, each
Mortgage, the Security Agreement and the Fee
Letter.'"
(g) "Pledge Agreement": the definition of "Pledge Agreement"
is hereby amended and restated as follows:
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"'Pledge Agreement' means the Pledge
Agreement to be duly executed and delivered by the Borrower
and each Domestic Subsidiary which is a Material
Subsidiary, substantially in the form of Exhibit F, as amended,
supplemented, amended and restated or otherwise modified from
time to time."
(h) "Restricted Subsidiary": the definition of "Restricted
Subsidiary" is amended by deleting the words "which is not an
Unrestricted Subsidiary" in the Credit Agreement; and
(i) "Unrestricted Subsidiary": the definition of
"Unrestricted Subsidiary" is deleted from Section 1.1 of the Credit
Agreement, and all references to "Unrestricted Subsidiary" shall be
deleted.
SUBPART 2.2. Amendments to Article II of the Existing Credit
Agreement. Article II of the Existing Credit Agreement ("The Credits") is
amended in accordance with Subpart 2.2.1.
SUBPART 2.2.1. Section 2.8 of the Existing Credit Agreement
("Mandatory Prepayments of Loans") is amended as follows:
(a) clause (a) thereof is hereby amended and restated as
follows:
"(a) Asset Dispositions. In the event that the Net
Disposition Proceeds of any Disposition (such Disposition, a
"Current Disposition") (other than a Disposition permitted
pursuant to clause (a), (b) or (c) of Section 8.2), and of all
prior Dispositions as to which a prepayment has not yet been
made under this clause (a), shall equal or exceed $250,000
then, the Borrower or such Restricted Subsidiary shall,
concurrently with the receipt of the Net Disposition Proceeds
of the Current Disposition, apply 100% of the Net Disposition
Proceeds of the Current Disposition and all such prior
Dispositions in accordance with clause (f).";
(b) clause (b) thereof is hereby amended by replacing the
words "Term Loans" in the fourth line thereof with the words "Loans
and certain other Indebtedness in accordance with clause (f),";
(c) clause (c) is amended by replacing the words "Term Loans"
in the sixth line thereof with the words "Loans and certain other
Indebtedness in accordance with clause (f),";
(d) a new clause (d) is added as follows:
"(d) Casualty Proceeds. If during any Fiscal Year one
or more Casualty Events shall have occurred for which the
Borrower or any Restricted Subsidiary shall receive Casualty
Proceeds in excess of $1,000,000 during such Fiscal Year, then
the Borrower or such Restricted Subsidiary may (provided that
no payment Default or Event of Default is continuing at such
time), within 365 days after the receipt by the Borrower or
such Restricted Subsidiary of such Casualty Proceeds, reinvest
up to 100% of such Casualty Proceeds to replace or repair the
assets that were the subject of such Casualty Event(s). Any
Casualty Proceeds that are not reinvested in accordance with
the previous sentence shall be applied to prepay Loans and
certain other Indebtedness in accordance with clause (f), (x)
in the case of the continuance of a
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payment Default or an Event of Default at such time, on the day
such Casualty Proceeds are received, in an amount equal to
100% of such Casualty Proceeds, and (y) otherwise on the
Business Day immediately succeeding the last day of such
365-day period, in an aggregate amount equal to the portion of
such Casualty Proceeds not so reinvested.";
(e) the previously existing clause (d) thereof is relettered
as "clause (f)" and is hereby amended and restated as follows:
"(f) Application of Proceeds. Any prepayment made
pursuant to clauses (a), (b), (c) and (d) shall be applied
first, to prepay Term Loans, allocated among the Term Loans as
follows: (i) first, to the next two scheduled and unpaid
principal installments of the Tranche A Term Loans (and any
Tranche B Term Loan, Tranche C Term Loan and Tranche D Term
Loan installments payable on or before such installment payment
dates) in direct order of maturities, and (ii) second, to the
remaining installments of the Term Loans pro rata, and, in each
case, related interest on the Term Loans, second, to reduce
outstandings under the Commitment Amount (as defined in the
Liquidity Facility) under the Liquidity Facility, third to any
other Obligations (as defined in the Liquidity Facility) under
the Liquidity Facility, fourth, to prepay Revolving Loans and
reduce the related Revolving Commitment and fifth, to pay any
other Obligations"; and
(f) the previously existing clause (f) thereof is relettered
as "clause (h)" and is amended by deleting in its entirety the
parenthetical in the first sentence thereof.
SUBPART 2.3. Amendments to Article VII of the Existing Credit
Agreement. Article VII of the Existing Credit Agreement ("Affirmative
Covenants") is amended in accordance with Subparts 2.3.1 through 2.3.4.
SUBPART 2.3.1. Section 7.1 of the Existing Credit Agreement
("Financial Statements") is amended as follows:
(a) a new clause (c) is added as follows:
"(c) promptly after available, but not later than 30
days after the end of each calendar month, a copy of (i) the
unaudited consolidated balance sheet of the Borrower and its
Restricted Subsidiaries as of the end of such month and the
related consolidated statements of earnings, cash flows and,
to the extent prepared, shareholders' equity for the period
commencing on the first day and ending on the last day of such
month and (ii) such divisional and segment net sales and
EBITDA reporting information prepared by the Borrower
consistent with the Borrower's normal monthly internal
reporting, certified by a Responsible Officer as fairly
presenting in all material respects (subject to year-end audit
adjustments) the financial position and the results of
operations of the Borrower and its Restricted Subsidiaries as
of the date thereof."
SUBPART 2.3.2. Section 7.11 of the Existing Credit Agreement ("Future
Subsidiaries") is amended and restated as follows:
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"7.11 Future Subsidiaries. Without limiting the effect of any
provision contained herein (including Section 8.3), upon any
Person becoming, after the date hereof, a Subsidiary of the
Borrower (other than any Subsidiary that is not a Material
Subsidiary), including any Person that was a Restricted
Subsidiary, but not a Material Subsidiary, but which becomes a
Material Subsidiary through internal growth or otherwise, or
upon the Borrower or any Subsidiary acquiring additional
capital stock of any existing Subsidiary which is then pledged
under the Pledge Agreement, at the Borrower's expense:
(a) regardless of whether such Person is a Material
Subsidiary, in the event such Person is a Domestic Subsidiary,
the Borrower shall cause such Person, if not theretofore a
party to the Guaranty, to execute a supplement to (i) the
Guaranty for the purpose of becoming a guarantor thereunder
and (ii) the Security Agreement for the purpose of becoming a
grantor thereunder, together with acknowledgment copies of
Uniform Commercial Code financing statements (form UCC-1)
executed and delivered by such Subsidiary naming such
Subsidiary as the debtor and the Administrative Agent as the
secured party, or other similar instruments or documents,
filed under the Uniform Commercial Code of all jurisdictions
as may be necessary or, in the opinion of the Administrative
Agent, desirable to perfect the security interest of the
Administrative Agent pursuant to the Security Agreement; and
(b) (i) in the event such Person is a Domestic
Subsidiary of the Borrower or a Material Subsidiary which is a
direct Foreign Subsidiary of the Borrower or a Domestic
Subsidiary of the Borrower, the Borrower or such applicable
Domestic Subsidiary shall, pursuant to the Pledge Agreement,
pledge to the Administrative Agent for the benefit of the
Lenders (free and clear of any other pledges relating to such
Person or any of its Subsidiaries) all of the outstanding
shares of such capital stock of such Subsidiary owned directly
by it (provided, that, in the event such Subsidiary is a
Foreign Subsidiary, the Borrower or Domestic Subsidiary shall
not be required to pledge more than 65% of the outstanding
shares of the capital stock of such Foreign Subsidiary), along
with undated stock powers for such certificates, executed in
blank (or, if any such shares of capital stock are
uncertificated, confirmation and evidence satisfactory to the
Administrative Agent that the security interest in such
uncertificated securities has been perfected by the
Administrative Agent in accordance with Section 9-115 of the
Uniform Commercial Code as in effect in the State of New York
or any similar law which may be applicable); and
(ii) in the event such Person is a Material Subsidiary and a
direct Foreign Subsidiary of the Borrower or any Domestic
Subsidiary of the Borrower, the Borrower or such applicable
Domestic Subsidiary shall, within 60 days of such Person
having become a Material Subsidiary of the Borrower or such
Domestic Subsidiary (and, in the case of any such existing
direct Foreign Subsidiary which is a Material Subsidiary as of
the Second Amendment Effective Date, within 60 days of the
Second Amendment Effective Date) execute and deliver a
supplement to the Pledge Agreement, which supplement shall,
under the law of incorporation of such Foreign Subsidiary, be
effective to create and perfect a valid security interest in
65% of the outstanding shares of the capital stock of such
Foreign Subsidiary, accompanied by legal opinions of outside
counsel to the Borrower in respect of such collateral,
reasonably satisfactory to the Agents."
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SUBPART 2.3.3. A new Section 7.15 is added as follows
"7.15. Real Estate. Within 45 days after the Second
Amendment Effective Date (or, with respect to the selection by
the Agents of a plant in substitution for any other single
plant specified below (and only with respect to such plant) in
accordance with the terms hereof, 45 days after the selection
of such plant), the Borrower shall cause to be delivered a
duly executed Mortgage (together with documentation requested
by and reasonably satisfactory to the Agents) with respect to
the plant located in Chicopee, Massachusetts and the plant
located in Piqua, Ohio (or any other two plants selected by
the Agents for which the provision of a security interest
thereon is reasonably practicable), accompanied by legal
opinions of outside counsel to the Borrower in respect of such
collateral, reasonably satisfactory to the Agents, all at the
Borrower's expense."
SUBPART 2.3.4. A new Section 7.16 is added as follows
"7.16. Pledged Stock of Foreign Subsidiaries.
Within 60 days after the Closing Date, the Borrower shall
promptly deliver, or cause to be delivered, appropriate
supplemental security documentation (consistent with the
corresponding terms of the Pledge Agreement) under the law of
the jurisdiction of incorporation of each Foreign Subsidiary
which is a direct Subsidiary of the Borrower or a Domestic
Subsidiary to the Administrative Agent, duly executed and
delivered by an Authorized Officer of the pledgor thereof, all
in form and substance satisfactory to the Administrative
Agent."
SUBPART 2.4. Amendments to Article VIII of the Existing Credit
Agreement. Article VIII of the Existing Credit Agreement ("Negative Covenants")
is amended in accordance with Subparts 2.4.1 through 2.4.7.
SUBPART 2.4.1. Section 8.1 of the Existing Credit Agreement
("Limitation on Liens") is amended as follows:
(a) clause (l) thereof is amended by inserting "in an
aggregate amount not to exceed $5,000,000 at any time outstanding
immediately following the word "Indebtedness" in the third line of
subclause (i) thereof;
(b) the provision set forth in clause (m) thereof is deleted
in its entirety and replaced with the word "Reserved.";
(c) clause (q) thereof is amended by inserting "under the
Liquidity Facility (including any extensions thereof and any
Refinancing permitted pursuant to Section 8.4(m) (plus accrued
interest and Obligations (as defined in the Liquidity Facility) under
the Liquidity Facility or such Refinancing from time to time) plus the
Lien on the plant located in Chicopee, Massachusetts, existing on the
date hereof and securing an aggregate principal amount not to exceed
$6,500,000;" at the end thereof; and
(d) a new clause (t) is added as follows:
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"(t) Liens placed on assets of any Foreign Subsidiary to
secure Indebtedness of a Foreign Subsidiary permitted pursuant
to Section 8.4(g), up to an aggregate principal amount at any
time of $50,000,000 and only to the extent that such
Indebtedness is not guaranteed by the Borrower or a Domestic
Subsidiary (without duplication)."
SUBPART 2.4.2. Section 8.2 of the Existing Credit Agreement
("Consolidations and Mergers; Sales of Assets") is amended as follows:
(a) clause (b) thereof is amended by inserting "; provided
that neither the Borrower nor any Domestic Subsidiary may sell or
otherwise transfer (i) its assets to any Foreign Subsidiary other than
in the ordinary course of business or (ii) material assets to one or
more Subsidiaries which are not Guarantors" at the end thereof;
(b) subclause (ii) of the proviso to clause (d) thereof is
amended by adding the words "; provided that in no event shall more
than 15% of the total consideration for any such Disposition consist
of non-cash consideration" at the end of such subclause; and
(c) clause (d) thereof is amended by adding a new subclause
(iv) to the proviso thereof as follows:
"(iv) any Disposition to an Affiliate of the Borrower
or any Restricted Subsidiary having an aggregate purchase
price of $10,000,000 or more shall require in advance of such
Disposition an independent fairness opinion with respect
thereto, a copy of which shall be delivered in advance of such
Disposition to the Lenders, from a firm reasonably acceptable
to the Agents."
SUBPART 2.4.3. Section 8.3 of the Existing Credit Agreement ("Loans,
Acquisitions and Investments") is amended as follows:
(a) clause (b) thereof is amended and restated as follows:
"(b) Investments in the Borrower or in any of its
Subsidiaries as reasonably necessary to conduct its business
operations or as necessary to effect the restructuring of the
Borrower and its Subsidiaries as contemplated;"
(b) clause (d) thereof is amended by deleting the number
"$5,000,000" appearing therein and inserting "$2,000,000" in
replacement therefor;
Section 8.3(h) is amended and restated as follows:
"(h) Investments by the Borrower or any Subsidiary
constituting an Acquisition which has been approved in writing by the
Majority Lenders (any such Acquisition so approved, a "Permitted
Acquisition");"; and
(c) clause (i) thereof is hereby amended and restated as
follows:
"(i) so long as no Event of Default or payment
Default exists and is continuing at the time of the making of
such Investment (or would occur immediately after giving
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effect thereto), additional Investments by the Borrower or its
Restricted Subsidiaries in an aggregate amount not to exceed
$1,000,000 at any time."
SUBPART 2.4.4. Section 8.4 of the Existing Credit Agreement
("Limitation on Indebtedness") is amended as follows:
(a) clause (c) thereof is amended by inserting "; provided
that such Indebtedness shall (i) if it is Indebtedness of the
Borrower, be subordinated to the Obligations and the Indebtedness
under the Liquidity Facility on terms reasonably satisfactory to the
Agents and (ii) to the extent it is Indebtedness held by the Borrower,
be evidenced by one or more promissory notes in form and substance
reasonably satisfactory to the Administrative Agent, which have been
duly executed, delivered and endorsed to the order of the
Administrative Agent in pledge pursuant to the Pledge Agreement;" at
the end thereof;
(b) subclause (ii) of the proviso to clause (d) is amended by
substituting the number "$75,000,000" with the number "$50,000,000"
and by adding at the end of such subclause the words "less the
principal amount of any such Indebtedness which is secured by a Lien
permitted pursuant to Section 8.1(t)";
(c) clause (e) thereof is amended by inserting "and the tenor
thereof is not in any respect shortened" immediately following the
parenthetical in subclause (i) of the proviso thereof;
(d) the provision set forth in clause (h) thereof is deleted
in its entirety and replaced with the word "Reserved.";
(e) the provision set forth in clause (i) thereof is deleted
in its entirety and replaced with the word "Reserved.";
(f) clause (l) thereof is amended by adding the word
"unsecured" after the word "additional" and by deleting the number
"$50,000,000" appearing therein and inserting "$25,000,000"; and
(g) a new clause (m) will be added as follows:
"(m) additional first-priority secured Indebtedness
of the Borrower and its Restricted Subsidiaries not to exceed
$25,000,000 in principal amount at any time outstanding,
incurred under the Liquidity Facility (as amended or
extended) and any refinancing thereof (the "Refinancing")
provided, that, as to any Refinancing, (i) the Liquidity
Facility has been repaid (or, concurrently with the
Refinancing, will be repaid) in full, (ii) the principal
amount of the Refinancing is not greater than $25,000,000,
(iii) prior to the Refinancing, the Borrower shall have
requested the Agents to amend or extend the Liquidity Facility
and one or more of the Agents have not agreed to such
amendment or extension, (iv) the institutions providing the
Refinancing shall not include any person which is not a Lender
under this Agreement immediately prior to the Refinancing, and
(v) the Lien on any property securing the Refinancing shall
not be prior to the Lien securing the Obligations."
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SUBPART 2.4.5. Section 8.5 of the Existing Credit Agreement
("Restricted Payments") is amended as follows:
(a) the provision set forth in clause (b) thereof is deleted
in its entirety and replaced with the word "Reserved.";
(b) the provision set forth in clause (c) thereof is deleted
in its entirety and replaced with the word "Reserved.";
(c) clause (e) thereof is amended by inserting "all as in
effect on the Second Amendment Effective Date (as defined in the
Second Amendment)" at the end thereof; and
(d) a new clause (g) will be added as follows:
"(g) Notwithstanding anything to the contrary in this
Section 8.5, no Subsidiary shall declare or make any dividend
payment unless such dividend is payable to the Borrower or a
wholly-owned Subsidiary of the Borrower."
SUBPART 2.4.6. Section 8.6 of the Existing Credit Agreement
("Financial Covenants") is amended as follows:
(a) the table appearing in clause (a) thereof is amended as
follows: (i) the ratio set forth opposite "March 31, 1998" shall be
amended to be "1.35 : 1.00", (ii) the ratio set forth opposite "June
30, 1998" shall be amended to be "1.30 : 1.00", and (iii) the ratio
set forth opposite the "September 30, 1998" shall be amended to be
"1.25 : 1.00";
(b) the table appearing in clause (b) thereof is amended and
restated in its entirety to read as follows:
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13
"Date Ratio
---- -----
September 30, 1997
and the last day of each
December, March, June and
September thereafter through
June 30, 1998 1.25 : 1.00
September 30, 1998 1.00 : 1.00
December 31, 1998
and the last day of each
December, March, June and
September thereafter through
June 30, 2000 1.25 : 1.00
September 30, 2000
and the last day of each
December, March, June and
September thereafter 1.35 : 1.00"
(c) the table appearing in clause (c) thereof is amended as
follows: (i) the ratio set forth opposite "March 31, 1998" shall be
amended to be "7.75 : 1.00", (ii) the ratio set forth opposite "June
30, 1998" shall be amended to be "7.75 : 1.00", and (iii) the ratio
set forth opposite the "September 30, 1998" shall be amended to be
"7.75 : 1.00";
SUBPART 2.4.7. A new Section 8.9 of the Existing Credit Agreement is
added as follows:
"8.9 Assets of the Borrower. The Borrower shall not own
beneficially or of record any material assets other than the capital
stock of its Subsidiaries (and the assets represented by the ownership
of such capital stock)."
SUBPART 2.5. Amendments to Article IX of the Existing Credit
Agreement. Article IX of the Existing Credit Agreement ("Events of Default") is
amended in accordance with Subpart 2.5.1.
SUBPART 2.5.1. Section 9.1 of the Existing Credit Agreement ("Event
of Default") is amended as follows:
(a) clause (c) thereof is hereby amended and restated as
follows:
" (c) Specific Defaults. The Borrower fails to perform
or observe any term, covenant or agreement
contained in any of clause (a)(i) of Section 7.3 or
Sections 8.1, 8.2 through 8.8, Section 4 of the
Security Agreement or Section 8 of the Pledge
Agreement; or"
(b) clause (d) thereof is amended by (i) deleting "Borrower
fails to perform or observe any term, covenant or agreement contained
in Section 8.1 and such default shall continue
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unremedied for 10 days after the date upon which a Responsible Officer
of the Borrower has actual knowledge or receives written notice
thereof; or the", and (ii) inserting "(i) a Responsible Officer of
the Borrower has actual knowledge thereof or (ii)" immediately
following the words "upon which" appearing in the sixth line thereof;
(c) clause (k) thereof is amended and restated as follows:
"(k) Collateral. Any provision of the Pledge
Agreement, the Security Agreement or any Mortgage shall for
any reason (other than as a result of acts or omissions of the
Administrative Agent or any Lender) cease to create a valid
security interest in the collateral purported to be covered
thereby (other than as to any such collateral which is
immaterial) or any material provision of the Pledge Agreement,
the Security Agreement, any Mortgage or the Guaranty shall
cease to be valid and binding on or enforceable against the
Borrower or any other Obligor party thereto, or the Borrower or
any other Obligor shall deny or disaffirm in writing its
obligations under the Pledge Agreement, the Security Agreement,
any Mortgage or the Guaranty."
SUBPART 2.6. Amendments to Article X of the Existing Credit
Agreement. Article X of the Existing Credit Agreement ("The Agents") is amended
in accordance with Subpart 2.6.1.
SUBPART 2.6.1. Section 10.11(a) of the Existing Credit Agreement
("Collateral Matters") is amended by adding the words ", the Security Agreement,
the Mortgages" after the words "to take any action with respect to any
collateral security" in the third line thereof.
ARTICLE III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Second Amendment Effective Date. This Amendment, and
the amendments and modifications contained herein, shall be and become effective
on the date (the "Second Amendment Effective Date") when each of the conditions
set forth in this Article III shall have been fulfilled to the satisfaction of
the Administrative Agent.
SUBPART 3.2. Execution of Counterparts. The Administrative Agent
shall have received counterparts of this Amendment, duly executed and delivered
on behalf of the Borrower and each of the Majority Lenders.
SUBPART 3.3. Resolutions; Incumbency. The Administrative Agent shall
have received (i) copies of the resolutions of the board of directors of the
Borrower authorizing the execution, delivery and performance of this Amendment,
each other Loan Document to be delivered by the Borrower in connection herewith
and the transactions contemplated hereby and thereby, certified as of the Second
Amendment Effective Date by the Secretary or an Assistant Secretary of the
Borrower, together with a certificate of the Secretary or Assistant Secretary of
the Borrower dated the Second Amendment Effective Date, certifying the names and
true signatures of the officers of the Borrower authorized to execute, deliver
and perform, as applicable, this Amendment, and such other Loan Documents to be
delivered by it in connection herewith; and (ii) copies of the resolutions of
the board of directors of each Subsidiary authorizing the delivery, execution
and performance by such Subsidiary of the Loan
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Documents to be delivered by it in connection herewith, certified as of the
Second Amendment Effective Date by the Secretary or an Assistant Secretary of
such Subsidiary, together with a certificate of the Secretary or Assistant
Secretary of such Subsidiary dated the Second Amendment Effective Date,
certifying the names and true signatures of the officers of such Subsidiary
authorized to execute, deliver and perform such Loan Documents.
SUBPART 3.4. Organization Documents. The Administrative Agent shall
have received the articles or certificate of incorporation and the bylaws of
each of Obligors for which such documents have not previously been delivered and
certified, in each case, as in effect on the Second Amendment Effective Date,
certified by the Secretary or Assistant Secretary of such Person as of the
Second Amendment Effective Date, together with a certification that any
documents which were previously delivered are in full force and effect and have
not, since the date of such delivery, been amended.
SUBPART 3.5. Approvals. All necessary material governmental,
shareholders' and third-party approvals in connection with the execution,
delivery and performance of this Amendment and the other Loan Documents
delivered in connection herewith.
SUBPART 3.6. Other Loan Documents. The Administrative Agent shall
have received:
(a) (x) an affirmation and consent by each of the Guarantors
and (x) a supplement to the Guaranty to add one or more additional
Guarantors thereunder and, in the case of (x) and (y), confirming that
upon the sale or other disposition of any Guarantor thereunder in
accordance with the terms of the Amended Credit Agreement, such
Guarantor shall be automatically released from all obligations
thereunder to the extent that such sale or other disposition causes
such Guarantor to cease being a Domestic Subsidiary of the Borrower,
(b) a Pledge Agreement by the Borrower and each applicable
Domestic Subsidiary, together with (i) the certificates, evidencing
all of the issued and outstanding shares of capital stock of the
Subsidiary being pledged thereby and (ii) executed blank undated stock
powers, and
(c) a Security Agreement, executed by the Borrower and each
Domestic Subsidiary in favor of the Administrative Agent.
SUBPART 3.7. Filings. All UCC and intellectual property filings
necessary or, in the opinion of the Administrative Agent, desirable to perfect
and/or to maintain the perfection of the Liens (as defined in the Loan
Documents) provided for in the Loan Documents shall have been executed by the
Borrower and each applicable Subsidiary and delivered to the Administrative
Agent for filing at the Borrower's expense.
SUBPART 3.8. Amendment Effective Date Certificate. The
Administrative Agent shall have received, with counterparts for each Agent, the
Amendment Effective Date Certificate, dated the Second Amendment Effective Date
and duly executed and delivered by an Authorized Officer of the Borrower, in
which certificate the Borrower shall agree and acknowledge that the statements
made therein shall be deemed to be true and correct (in all material respects)
representations and warranties of the Borrower made as of such date, and, at the
time each such certificate is delivered, such statements shall in fact be true
and correct.
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SUBPART 3.9. Legal Opinions. The Administrative Agent shall have
received a favorable legal opinion of (i) Xxxxxxx Xxxxxxx & Xxxxxxxx, special
counsel to the Obligors and (ii) the General Counsel to the Borrower, in each
case, addressed to the Administrative Agent and the Lenders and dated the Second
Amendment Effective Date, substantially in the forms of Annex A-1 and Annex A-2,
respectively.
SUBPART 3.10. Fees and Expenses. The Administrative Agent shall have
received all costs, fees (including, for each Lender party hereto, an amendment
fee equal to .25% of such Lender's Commitment) and expenses due and payable
pursuant to Subpart 5.4 (to the extent then invoiced) and pursuant to the
Existing Credit Agreement (including all previously invoiced fees and
expenses).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SUBPART 4.1. Representations and Warranties. In order to induce the
Lenders and the Administrative Agent to enter into this Amendment, the Borrower
hereby represents and warrants to each Agent and each Lender, as of the date
hereof, as follows:
(a) the representations and warranties contained in Article
VI of the Existing Credit Agreement (after giving effect to the
amendments set forth herein) and in each of the other Loan Documents
are true and correct in all material respects on and as of such date,
as though made on and as of such date (except to the extent such
representations and warranties expressly refer to an earlier date, in
which case they shall be true and correct in all material respects as
of such earlier date);
(b) no Default or Event of Default exists or would result
from the amendments or modifications set forth in Article II or the
other transactions contemplated hereby or from the grant or perfection
of the Lien of the Administrative Agent and the Lenders on the
collateral security provided under the Loan Documents delivered in
connection herewith;
(c) except as disclosed to the Lenders on March 23, 1998 or as
disclosed in the Bank Book, no Material Adverse Change has occurred
since September 30, 1997 and no material adverse change has occurred
since September 30, 1997 with respect to the business, assets,
operations, results of operations, condition (financial or otherwise)
or prospects of the Borrower or the Borrower and its Subsidiaries,
taken as a whole; and
(d) neither the Borrower nor any of its Subsidiaries is
subject to any material litigation or governmental proceeding with
respect to the transactions contemplated hereby and no injunction or
restraining order exists with respect to such transactions.
SUBPART 4.2. Full Disclosure. (a) All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower or any of its Subsidiaries in writing to any Agent and/or any Lender on
or before the Secondment Amendment Effective Date (including all information
contained herein and in the other Loan Documents delivered in connection
herewith) for purposes of or in connection with this Amendment or any
transactions contemplated herein is true and complete in all material respects
on the date as of which such information is dated or certified and not
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17
incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided, it being understood and
agreed that for purposes of this clause (a), such factual information shall not
include projections and pro forma financial information.
(b) The projections and pro forma financial information contained in
the factual information referred to in clause (a) above were or are based on
good faith estimates and assumptions believed to be reasonable at the time
made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ significantly from the
projected results.
ARTICLE V
MISCELLANEOUS
SUBPART 5.1. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Existing Credit Agreement and
the other Loan Documents shall remain unamended and unwaived and shall continue
to be, and shall remain, in full force and effect in accordance with their
respective terms. The amendments set forth herein shall be limited precisely as
provided for herein to the provisions expressly amended herein and shall not be
deemed to be an amendment to, consent to or modification of any other term or
provision of the Existing Credit Agreement, any other Loan Document referred to
therein or herein or of any transaction or further or future action on the part
of the Borrower or any other Obligor which would require the consent of the
Lenders under the Existing Credit Agreement or any of the other Loan Documents.
SUBPART 5.2. Loan Document Pursuant to Existing Credit Agreement.
This Amendment is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement (and, following
the date hereof, the Amended Credit Agreement). Any breach of any
representation or warranty or covenant or agreement contained in this Amendment
shall be deemed to be an Event of Default for all purposes of the Existing
Credit Agreement and the other Loan Documents.
SUBPART 5.3. Further Assurances. The Borrower hereby agrees that it
will take any action that from time to time may be reasonably necessary to
effectuate the agreements contemplated herein.
SUBPART 5.4. Fees and Expenses. The Borrower shall pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent in
connection with the preparation, negotiation, execution and delivery of this
Amendment and the documents and transactions contemplated hereby, including the
reasonable fees and disbursements of Mayer, Brown, and Xxxxx, as counsel for the
Administrative Agent and of Wachtell, Lipton, Xxxxx & Xxxx, as counsel for the
Administrative Agent.
SUBPART 5.5. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provisions hereof.
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SUBPART 5.6. Counterparts. This Amendment may be executed in any
number of separate counterparts, each of which, when so executed, shall be
deemed an original, and all of said counterparts taken together shall be deemed
to constitute but one and the same instrument.
SUBPART 5.7. Cross-References. References in this Amendment to any
Article or Subpart are, unless otherwise specified or otherwise required by the
context, to such Article or Subpart of this Amendment.
SUBPART 5.8. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 5.9. No Third Parties Benefited. This Amendment is made and
entered into for the sole protection and legal benefit of the Borrower, the
Lenders, each Agent and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Amendment or any of the other Loan Documents.
SUBPART 5.10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
EVENFLO & SPALDING HOLDINGS
CORPORATION (formerly known as
E&S Holdings Corporation), as the Borrower
By ______________________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Administrative Agent
By ______________________________________
Name:
Title:
Lenders:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By ______________________________________
Name:
Title:
XXXXXXX XXXXX CAPITAL CORPORATION
By ______________________________________
Name:
Title:
20
XXXXXXX XXXXX DEBT STRATEGY FUND
By ______________________________________
Name:
Title:
XXXXXXX XXXXX DEBT STRATEGY PORTFOLIO
By ______________________________________
Name:
Title:
NATIONSBANK N.A. SOUTH
By ______________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By ______________________________________
Name:
Title:
BANKERS TRUST COMPANY
By ______________________________________
Name:
Title:
21
CITY NATIONAL BANK
By ______________________________________
Name:
Title:
FLEET NATIONAL BANK
By ______________________________________
Name:
Title:
SOCIETE GENERALE
By ______________________________________
Name:
Title:
XXXXX FARGO BANK, N.A.
By ______________________________________
Name:
Title:
CIBC, INC.
By ______________________________________
Name:
Title:
ROYAL BANK OF CANADA
By ______________________________________
Name:
Title:
22
XXX XXXXXX AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By ______________________________________
Name:
Title:
XXX XXXXXX AMERICAN CLO I LTD.
By ______________________________________
Name:
Title:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By ______________________________________
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By ______________________________________
Name:
Title:
LTCB TRUST COMPANY
By ______________________________________
Name:
Title:
23
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By ____________________________________
Name:
Title:
OAK HILL SECURITIES FUND, L.P.
By Oak Hill Securities GenPar, L.P.,
its General Partner
By Oak Hill Securities MGP, Inc.,
its General Partner
By _____________________________
Name:
Title:
PRIME INCOME TRUST
By ______________________________________
Name:
Title:
AERIES FINANCE, LTD.
By ______________________________________
Name:
Title:
24
ABN AMRO BANK N.V.
By ______________________________________
Name:
Title:
By ______________________________________
Name:
Title:
BANK OF TOKYO -- MITSUBISHI TRUST COMPANY
By ______________________________________
Name:
Title:
BANQUE PARIBAS
By ______________________________________
Name:
Title:
By ______________________________________
Name:
Title:
BAYBANK, N.A.
By ______________________________________
Name:
Title:
25
CAPTIVA FINANCE, LTD.
By ______________________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By ______________________________________
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By ______________________________________
Name:
Title:
CYPRESS TREE INVESTMENT MANAGEMENT CO.
By ______________________________________
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD.
By ______________________________________
Name:
Title:
26
DLJ CAPITAL FUNDING, INC.
By ______________________________________
Name:
Title:
FIRST NATIONAL BANK OF BOSTON
By ______________________________________
Name:
Title:
XXXXXXX XXXXX CREDIT PARTNERS L.P.
By ______________________________________
Name:
Title:
KZH HOLDING CORPORATION
By ______________________________________
Name:
Title:
XXXXXX SYNDICATED LOANS, INC.
By ______________________________________
Name:
Title:
27
MEDICAL LIABILITY MUTUAL
By ______________________________________
Name:
Title:
XXXXXXX XXXXX CBO IV (CAYMAN) LTD.
By ______________________________________
Name:
Title:
XXXXXX XXXXXXX SENIOR
FUNDING, INC.
By ______________________________________
Name:
Title:
NATIONAL CITY BANK
By ______________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
By ______________________________________
Name:
Title:
OCTAGON LOAN TRUST
(a unit of Chase Manhattan Bank)
By ______________________________________
Name:
Title:
28
ORIX USA CORPORATION
By ______________________________________
Name:
Title:
PAMCO CAYMAN, LTD.
By ______________________________________
Name:
Title:
ROYALTON COMPANY, LTD. (c/o Pacific
Investment Management Co.)
By ______________________________________
Name:
Title:
SENIOR DEBT PORTFOLIO
(c/o Boston Management and Research Co.)
By ______________________________________
Name:
Title:
